Abstract

Immigration affects long-run projections of U.S. CO2 emissions, via the impacts on population scale, population aging, and labor supply. This article estimates the labor supply effects, complementing an earlier paper in which the authors have modeled the effects of scale and aging. Labor supply effects on future CO2 emissions are approximated based on recent survey data on earnings differences between immigrant and native-born households and on existing demographic projections. Gaps in average earnings are found to be substantial only for Hispanic immigrants, between 25 and 47 percent below native-born peers, depending on the age group and measure used. Impacts are estimated using a range of population projections and assumptions about future convergence, or assimilation, of the earnings of immigrants and their descendents to those of the descendents of the native-born population. If per capita earnings differences remain near current levels, the aggregate effects on per capita earnings and consumption are found to be affected more by the rate at which the immigrant population's earnings converge to native-born levels than by projected differences in future immigration. If assimilation is rapid, the impacts of immigration are proportional to the size of the first generation and negligible, regardless of the level of immigration. If future assimilation is impeded, the marginal impacts will be more substantial and vary with the level of immigration but still well below 10% in 2100 when calculated using the preferred measure of earning differences and only exceed 10% when the impacts are calculated using the alternate per capita earnings differences.